Washington, D.C., isn’t just the country’s capital and political hub—it’s an important city for businesses, too. The District of Columbia offers a handful of key tax incentives, credits, and exemptions for certain businesses, namely high-tech companies investing in growth and community improvement. Keep reading to learn more.
Washington, D.C. tax incentives for businesses
Qualified High Tech Companies Incentives
The Qualified High Tech Companies (QHTC) program offers a few tax incentives to businesses located in or relocating to D.C.. To be considered a QHTC, a company has to meet the following requirements:
Be registered in D.C. and have an office in the District that’s not located in the D.C. Ballpark TIF Area
Derive at least 51% of gross revenues earned in the District from one or more permitted high technology activities, like website design or software development
Have 10 or more qualified full-time employees (working at least 35 hours a week) in the District
Companies that qualify as QHTCs can take advantage of three tax benefits:
Retraining Costs for Qualified Disadvantaged Employees: Businesses that employ and train qualified disadvantaged employees (people who receive Temporary Assistance for Needy Families, for example, or who have been recently released from incarceration) can take a $10,000 retraining credit per employee for the first 18 months of their employment. Businesses can use the credit to offset their corporate franchise taxes.
Wages Paid to Qualified Disadvantaged Employees: Businesses can take a credit against their corporate franchise tax equal to 5% of the wages they pay employees (for the first two years of their employment) hired after 2017. The maximum credit is $15,000 per year per qualified employee.
Wages Paid to Qualified Employees: Businesses that employ qualified employees can claim a credit against their corporate franchise tax equal to 50% of the wages they pay to these employees. The maximum credit is $3,000 per year per qualified employee.
It’s worth noting that the QHTC incentives program has undergone significant changes over the years, with certain tax advantages being repealed or adjusted. Make sure you review the latest QHTC tax forms and instructions here to see what the program is currently offering.
Need hiring help? Follow these 10 straightforward steps to hiring employees in Washington D.C..
Creative and Open Space Modernization Tax Rebate
The Creative and Open Space Modernization Tax Rebate provides QHTCs in the District with tax rebates to enhance their business spaces and purchase heavy equipment. Qualified tech companies can get a tax rebate of 10% of their total qualified business improvements or the tenant’s portion of the annual real property tax, whichever is less.
The maximum rebate amount is $1 million a year for up to five years. To qualify for the rebate, a business has to meet the following criteria:
Be a certified QHTC
Have leased an office space in D.C. that’s at least 50,000 square feet after July 1, 2015
Keep the office space for at least 12 years
Provide a public benefit that will positively impact D.C., like giving low-income or underserved customers discounts on services or goods, or providing jobs or training opportunities to community locals
Learn more about the rebate program and how to apply here.
The District of Columbia Film, Television and Entertainment Rebate Fund
The District of Columbia Film, Television and Entertainment Rebate Fund incentivizes production companies to set their film, TV, and other video projects in D.C.—and to hire local crew members.
Run by The Office of Cable Television, Film, Music, and Entertainment (OCTFME), the rebate fund offers eligible production companies a variety of different incentives:
Up to 35% of qualified production expenditures in D.C.
Up to 21% of qualified production expenditures in D.C. with D.C. registered vendors, cast, and crew
Up to 30% of qualified personnel expenditures in D.C. (for resident cast and crew)
Up to 10% of qualified personnel expenditures in D.C. (for non-resident cast and crew)
Up to 50% of qualified job training expenditures
Up to 25% of the company’s base infrastructure investment
To qualify for the incentive, production companies must spend at least $250,000 in production expenses in D.C.. Learn more about the program and how to apply here.
Supermarket Tax Incentives
D.C.’s Supermarket Tax Incentives were created to encourage grocery businesses to set up shop in neighborhoods that lack access to fresh fruits and vegetables. Grocery stores in specific areas of D.C. that take on a development or renovation project might be eligible for one or more of the following exemptions, for up to 10 years:
Real property tax exemption
Business license fee exemption
Personal property tax exemption
Sales and use tax exemption on building materials for construction
Here are the qualification requirements for grocery stores:
Be located in one of the eligible areas
Be licensed by the Department of Licensing and Consumer Protection (DLCP) as a grocery store
Offer products in at least six of the following categories: Fresh fruits and vegetables; fresh and uncooked meats, poultry, and seafood; dairy products; canned foods; frozen foods; dry groceries and baked goods; and non-alcoholic beverages.
Dedicate at least 50% of the store’s total square footage (or 6,000 square feet) to the sale of products
Dedicate at least 5% of the selling area to each of the food categories
Apply for the incentives here.
Business financing in Washington D.C.
If you own a business in Washington D.C., you’re in luck—the District has a variety of grant and loan programs geared toward businesses in certain areas and industries.
For a full list of resources, check out Gusto’s guide to grants and loans in Washington D.C..
